15–17 Backfields Lane
Stokes Croft,
Bristol, BS2 8QW

Designed an awesome product?

Posted by Cat How, February 28, 2018

As a creative director and former shop owner (of online design shop Howkapow) the one thing I loved most was finding beautiful products. But no matter how beautiful a product was, what it costed — not only to my customers but also to me as a buyer — was the deciding factor over whether we got it in the shop or not.

We had many a painful moment where we found something beautifully made and perfect for our shop, but simply were not able to stock it because either the price was too high for our customer base, or the designer hadn’t worked out their wholesale prices accordingly. Here are a couple of tips from a buyers’ point of view that might hopefully help to iron out a few questions you might have about pricing.

  • Wholesale vs. Retail. Wholesale can be defined as ‘the selling of goods in large quantities to be retailed by others.’ As a retailer, I would buy a product from you — a designer / wholesaler — then add my mark up (usually x2.4 which includes VAT) to get a retail price. A retail price (also known as RRP or recommended retail price) is the agreed price that I would sell your product for to my customers, and which I would expect you to sell to yours.
  • A 2.4 Mark Up: For shops and buyers, a 2.4 mark up is the holy grail. Some shops, especially those in fashion use a mark up of 3. Any design shop which is VAT registered (like ours was) usually works on a 2.4 mark up to take into account a 20% Value Added Tax fee.
  • Breaking Down The 2.4 Mark Up: To break this pricing down I would buy a product from you at a wholesale price of £10, then double that to get £20 in order to get our fee; and then we would have to add 20% on top of that (£4) to make sure we cover our VAT. So something that you sell on your shop to the general public for £24 you should expect to wholesale to a shop for £10. Most shops expect this and often would not even consider a product if it doesn’t adhere to these rules. It might seem pretty steep that a shop would get the same amount as you (£10) simply for selling your product on, but you have to take into account overheads a shop may have — like staffing, rent, packaging, press and promotion around your product and website or shop maintenance — so actually it works out pretty even.
  • How To Make This Work For You: Most designers find it really hard to stick to this rule, as they make many of the products themselves and so can’t cut their prices down to take into account the amount of time they have invested making something. I totally understand, and in this instance we’d probably say that it is best for a designer to sell directly to the public themselves as that way you can get the biggest profit margin. Another option is to have pack sizes or minimum order quantities or values so that you lock a shop into buying a certain amount from you for a certain price so that you know you are making money by selling in bulk.
  • Relative Pricing: Make sure that when you work out your wholesale and retail prices, that they are relative to the same products also available in the market. For example, a tea towel generally retails at around £10 so make sure that you are able to sell a tea towel to a shop for no more than £4.20 and still make money for yourself. However, if you make hand-blown glass vases which cost you £60 in materials and time, then pitch your products at more high end shops which can sell it for the retail price that it deserves — so around £144 or indeed more.
  • Consistent Pricing: If a shop (in particular an online one) buys a load of products off you wholesale then the worst thing you can do is undersell this shop on your own website. It will not go down well. If you have your own online shop then it is imperative that you sell your products at the same price that you expect the other online shop to sell them for — this is just to keep it fair on the Big Bad Web where customers can hunt for the best price. It means you are not in direct competition with each other, and can simply be two separate places for customers to buy your work. You cannot expect a shop to place another order with you if they find out that they are having to cut their margins down to keep to the same price you are selling your product for, so if you are wanting to reduce the prices on your products it is always best to let your suppliers know beforehand 🙂

Cat How is a Creative Director and Co-Founder of Pollen Place — a unique workspace and event space based in central Bristol designed to nurture creativity and spark productivity. She is also Creative Director of creative agency, Polleni. Cat studied at the University of Bristol and Central Saint Martins College of Art & Design. She has worked as a journalist and graphic designer for newspapers such as MetroThe Guardian and The Observer. Most recently, she was creative director of the e-commerce design business, Howkapow, she founded and ran with her husband Rog How. Howkapow was sold in February 2017. In that time Cat and Rog were running it, Howkapow was given accolades such as the “Best Online Shop for Stylish Homewares” (The Guardian); one of the “Top Ten Online Design Shops” (The Sunday Times) and their pop-up “The Best Shop To Visit In Bristol” (The Guardian).

(picture credit Eda Akaltun)

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